Third Point Management, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. Third Point returned +11.0% in the flagship Offshore Fund. For the month of April, the Offshore Fund returned +1.7%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Third Point Management, in its Q1 2021 investor letter, mentioned Upstart Holdings, Inc. (NASDAQ: UPST), and shared their insights on the company. Upstart Holdings, Inc. is a San Carlos, California-based consumer lending company that currently has a $7.2 billion market capitalization. Since the beginning of the year, UPST delivered a 27.55% return, extending its 12-month gains to 135.51%. As of May 07, 2021, the stock closed at $95.97 per share.
Here is what Third Point Management has to say about Upstart Holdings, Inc. in its Q1 2021 investor letter:
“Our three top winners in Q1 were born out of our private investing efforts – (including) Upstart, which went public last December… We own approximately 15% of Upstart.. We initially invested in Upstart at a $145 million valuation (currently a $7 billion market cap).. We sat on their boards throughout their journey from start-ups to mature businesses, adding value in a variety of areas from talent acquisition to go-to-market strategies to navigating capital markets. Unlike a traditional VC firm, we see an IPO as just another stage in the company’s lifecycle and can continue both our board involvement and financial investment in these world-class companies following their public listings.
Given that this company is still at the hyper-growth stage, they also command high valuations commensurate with their expansion and future potential, something we are comfortable with given our intimate knowledge of their management teams, strategy, and promise. However, owning such investments, notwithstanding our low basis, does add significant volatility to our portfolio. We can mitigate a portion of this volatility by thoughtfully constructing hedges with similar factor characteristics but there is no “free lunch” in this game and so we are learning to live with some increased volatility in the fund as these types of high-growth companies appreciate and become a greater proportion of the portfolio. For example, Upstart, in which we invested approximately $66 million and added 1.2 million shares at its IPO is now our largest position, representing a market value of approximately $1.2 billion today.”
Our calculations show that Upstart Holdings, Inc. (NASDAQ: UPST) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Upstart Holdings, Inc. was in 15 hedge fund portfolios. UPST delivered a -24.61% return in the past 3 months.
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